Takeaways by Bloomberg AI
- Several muni borrowers looking to refinance outstanding bonds are delaying deals due to yields near record highs.
- About $6 billion of refunding deals are on hold or delayed as issuers wait for lower yields, said Ajay Thomas, head of public finance for FHN Financial.
- Elevated yields could lead to more delayed deals in the coming weeks, with issuers such as the Metropolitan Transportation Authority and Philadelphia’s school district already delaying or putting deals on hold.
Several muni borrowers looking to refinance outstanding bonds are delaying deals due to yields near record highs.
For instance, New Jersey’s Transportation Trust Fund Authority was planning to sell $1.7 billion of refunding bonds on Oct. 1, according to a posting on the state’s Department of Treasury website, but the deal did not price.
Issuers attempting to sell new debt to grab lower interest rates and reduce debt-service costs are now facing a tricky situation after last week’s selloff. Yields on benchmark 30-year muni debt soared to about 5.26%, the highest since at least 2011, before falling back to roughly 5.12% as of Monday.
About $6 billion of refunding deals are on hold or delayed as issuers wait for lower yields, said Ajay Thomas, head of public finance for FHN Financial.
“By the nature of where rates have gone in the past 10 days to two weeks, you are probably going to see a lot of refunding deals that made economic sense fall out of the money,” Thomas said. “Some issuers will say we can afford to wait or we are going to have to wait.”
New Jersey’s Transportation Trust Fund had $17.8 billion of outstanding debt, as of June 30, according to bond documents. The fund helps finance capital improvements throughout the state for roads, bridges and mass-transit, including New Jersey Transit.
A spokesperson for New Jersey’s Treasury Department, which oversees the state’s debt sales, didn’t immediately respond to an email and phone message. Barclays PLC, the senior manager on the $1.69 billion deal, declined to comment.
In addition, a $450 million refunding deal for Philadelphia’s school district that was on the schedule to price this week is now listed as day-to-day, according to Samantha Funk, head of public finance at PNC Bank, the lead manager of the deal.
Elevated yields could lead to more delayed deals in the coming weeks. The Metropolitan Transportation Authority, which runs New York City’s transit network of subways, buses and commuter rails, is looking to refund $1 billion of prior debt this month, although the deal is subject to market conditions, according to MTA documents.
“Most concerning in this high-interest-rate environment and most impactful is for our future funding for future issuance of debt, and we will be factoring in high interest rates in our November financial plan,” Olga Chernat, the MTA’s deputy chief of financial services, said during the agency’s finance committee meeting on Sept. 28.
Bloomberg Markets
By Michelle Kaske and Shruti Singh
October 5, 2026